Recent stadiums built for MLS
teams

Recent professional soccer-specific
stadiums built for Major League
Soccer teams include:

• Houston's BBVA Compass
Stadium in 2012. The $95 million, 22,039-seat
venue is home to the MLS' Houston
Dynamo and Texas Southern
University. The team paid $60 million of the
cost, according to the Houston
Chronicle, and the remainder was public
funding.

• In 2010,
18,500-seat PPL Park opened as
home of the MLS' Philadelphia
Union in Chester, Pa., for $120 million, which
was nearly entirely publicly funded.

• Also in 2010, 25,189-seat Red
Bull Arena opened in Harrison, N.J., as the
$200 million home of the New York Red
Bulls. It was designed by Southfield-based
architects Rossetti Associates
Inc. and paid for by the team. Much of the
proposed ancillary office, retail and residential components,
financed publicly, remain unbuilt, according to several media
reports.

• In 2008, the
Montreal Impact began play at
20,051-seat Saputo Stadium; its
$47 million was privately funded.

• In 2007, the city of Toronto built the $63
million, 22,453-seat BMO Field,
used by Toronto FC; and Commerce
City, Colo., split the $131 million cost of 18,086-seat
Dick's Sporting Goods Park with
the owners of MLS' Colorado
Rapids.

Source: Crain's
research

The family behind a plan for a local Major League Soccer team is expected to find out this week if it will be the successful bidder for the unfinished Wayne County jail site. If it is, it will be the culmination of a three-year plan to bring the sport to metro Detroit.

But even if the Apostolopoulos family wins against a rival bid for the land by Dan Gilbert, it still will face an uphill battle to make a team profitable. Just four or five of the professional soccer league's 19 clubs make money, sources familiar with the situation told Crain's.

That means even if the family is successful in its bid to purchase the county land and turn it into a mixed-use development including an open-air soccer stadium, its success in growing a stable fan base that will spend the money required to make the Detroit team a money-making enterprise is far from a given.

Pro soccer is a hard dollar: Even the majority of the elite English Premier League soccer teams are in the red, according to public reports.

But before the financial success of a Detroit team is even a consideration, the Apostolopoulos family must first secure the land it wants, and then get MLS to agree to sell it the rights to run a team in Detroit.

All of that could happen in coming weeks and months.

The Apostolopouloses, Greek-born Canadian commercial property developers who bought the Pontiac Silverdome in 2009, are one of two bidders on the unfinished jail site off Gratiot Avenue near I-375.

A committee has met several times in recent weeks to hash out a recommendation on which project to pick for the Wayne County Commission to approve. A committee vote could happen this week.

The other bidder is Dan Gilbert's Rock Ventures LLC, which proposes a $500 million development of 1.7 million square feet, with 700 residential and hotel units and 200,000 square feet of retail and parking.

The plan

The Apostolopouloses' Toronto-based Triple Properties Inc. plan is a $1 billion-plus development that includes a 25,000-seat open-air soccer stadium, a 275,000-square-foot retail complex with high-end retailers and food courts, 1 million square feet of residential space including two towers, and 1.3 million square feet of office space and parking.

The stadium is estimated to cost $230 million to $250 million, and the cost to buy into the MLS is typically $40 million to $70 million.

The investment fee for the right to operate an MLS team usually is paid over three years.

The Apostolopouloses haven't disclosed how they will pay for the project other than they intend to use debt financing for some of it and family money for the rest. They want to begin play by 2016.

Steve Apostolopoulos, co-founder and managing director of Triple Properties, said he's received interest from celebrities here about minority ownership stakes in the team. He declined to name names.

The jail site became available after the county in June put a 60-day moratorium on construction of the jail, which was $91 million over budget.

The Wayne County Building Authority in August voted to terminate the jail project contract with Detroit-based builder Walbridge Aldinger Co., and the county then began to seek redevelopment bids.

Forbes ranked patriarch Andreas Apostolopoulos and family as the 61st wealthiest Canadians in 2012 with a net worth of $1.08 billion.

Triple Properties owns 11 million square feet of property around the world, including New York City, Chicago, London, Greece and Australia.

If they don't get the jail site, the Apostolopouloses say they intend to continue to pursue an MLS team.

Soccer finances

The league said it does not comment on its finances, but it's been reported that MLS had about $230 million to $300 million in revenue last season, according to various analyses from a number of soccer and sports finance bloggers. The league says that range is low but declined to offer an alternative.

Those working in the elite level of pro soccer say the Apostolopoulos bid can work, but it won't be easy.

"I don't think it's impossible to make an MLS expansion franchise successful in Detroit, but it will be difficult," said Andy Appleby, founder of General Sports and Entertainment LLC in Rochester. He's is co-owner and chairman of Derby County Football Club Ltd., an English professional soccer team playing in Britain's second-highest level of pro soccer.

"The (MLS) franchise fee is substantial, but the development cost of a new stadium would also be very large on that site or any other," said Appleby, who organized an investment consortium that bought the Derby County club and its 33,597-seat Pride Park Stadium for $100 million in January 2008.

While the English Premier League is widely considered the pinnacle of professional soccer, only eight of its 20 clubs had a profit in 2011-12 despite $3.8 billion in leaguewide revenue, according to a report last year from Britain's The Guardian newspaper.

Detroit bid

Dan Courtemanche, MLS executive vice president for communications, said the league has had preliminary discussions with the Apostolopoulos family about bringing a team to metro Detroit.

There are not current talks, but MLS is interested in Detroit for a possible expansion team, he said.

"We've been certainly monitoring the market," he said. "We've seen and read about the plans."

Courtemanche has said MLS will expand by four teams, to 24, by the 2020 season. Three likely markets will be Miami, Orlando and Atlanta. There's been speculation about Omaha, Neb., and the Carolinas, too.

In May, it was announced that baseball's New York Yankees and EPL club Manchester City have jointly agreed to pay $100 million for the rights to a second MLS team in New York. It will be the league's 20th.

When New York FC begins play in 2015, it will be the 10th MLS team added since 2005.

MLS shrank to 10 teams from 12 in 2001, with the Miami Fusion and Tampa Bay Mutiny being eliminated.

A unique model

An MLS team in Detroit would represent the first new major pro sport in the city since the Detroit Pistons arrived from Fort Wayne, Ind., in 1957, and it would be unique in its ownership structure.

MLS is a single-entity business, meaning all teams are owned by the league and all players are its employees rather than employed by the club. MLS pays the players.

Team "owners" pay an investment fee to MLS for the right to operate a team in a geographic area. They become league shareholders rather than franchise owners. Teams keep their own books and budgets.

An advantage of a single-entity structure is it gives MLS economies of scale, such as group disability insurance.

MLS operates much like the four major U.S. pro sports leagues in that it shares certain revenue among all the member clubs, and teams keep other revenues for themselves.

It splits equally among each team its national television broadcast revenue, licensing fees and any expansion fee. Home teams keep 70 percent of ticket sales, and the other 30 percent is shared equally among the other clubs.

Each team keeps any local TV rights revenue, on-site merchandise sales, any game-day concessions and parking, and money from jersey sponsorships, stadium naming-rights deals and local corporate sponsorships.

Apostolopoulos said they are in contact with potential corporate sponsors, but declined to say whether those are for jersey sponsorship or other marketing efforts.

Marietta, Ga.-based Home Depot Inc. paid $70 million over 10 years to put its name on the stadium shared by MLS teams L.A. Galaxy and Chivas USA, and that deal was replaced by an undisclosed sponsorship from StubHub in March.

Unlike the other U.S. pro leagues, MLS teams can sell jersey sponsorships — a universal practice with big money in the soccer world.

For example, the Galaxy signed a 10-year, $44 million jersey logo deal with Los Angeles-based Herbalife Ltd. in 2012.

"That's something that can put a team over the top," Courtemanche said.

MLS jersey deals are a shadow of what English Premier League teams are paid.

Last year, Chevrolet signed a seven-year, $600 million to become Manchester United's jersey sponsor starting in 2014.

Dubai-based Emirates airline reportedly is paying Real Madrid $30 million annually to have its name on its kit, or soccer outfit.

TV money

MLS is gradually increasing how much money it gets from national networks to air its games. That revenue is shared equally among the teams.

NBC Sports Network agreed in 2011 to pay $30 million to air 45 MLS games over three years.

That contract, along with deals with ESPN and Univision, expire after the 2014 season. New deals are expected to pay the league more.

The national television revenue still likely will be dwarfed by what the other U.S. pro leagues are paid for their broadcast rights.

Baseball's multiyear deals that begin in 2014 with Turner Broadcasting System Inc., Fox Sports Media Group and ESPN will pay the league a combined $12.1 billion through 2012.

The NHL gets $300 million yearly from deals with NBC Sports and the Canadian Broadcasting Corp.

The most lucrative collection of TV rights deals is the $28 billion the NFL will collect between 2014 and 2022 from Fox, NBC and CBS.

NBC Sports is in the first year of what Sports Illustrated reported earlier this year as a three-year, $250 million deal to air 380 Premier League games.

A handful of MLS teams have local cable TV deals. The L.A. Galaxy reportedly signed a 10-year, $55 million contract with Time Warner Cable in 2011, which represents the high end of such deals for MLS teams.

Some MLS teams still pay local cable operators to carry games, or barter air time in exchange for a percentage of advertising sales.

"It's still too early for TV (deals)," Apostolopoulos said. "We've had preliminary discussions. I don't think we'll have an issue getting a strong contract with a TV network. It may take time to put together, but I think we're sitting in a good position."

Apostolopoulos believes a Detroit MLS club can average up to 21,000 fans per game and have a season ticket holder base of about 10,000.

MLS' 19 teams averaged a collective 18,807 fans per game last season, which runs from March to October. That was the best average since the league began play in 1996. It drew about 6 million fans in total in 2012.

Each team plays 34 regular-season games, typically including 17 home games. MLS teams can have an unbalanced number of home and road games.

The Seattle Sounders led MLS in average per-game attendance last season with 40,923 at CenturyLink Field. The venue seats 67,000 for the NFL's Seattle Seahawks.

Player costs

MLS teams have a 30-player roster, and the average salary for players is $160,000 as of 2013.

The 2013 MLS per-team salary cap is $2.95 million. By contrast, the NFL's current per-team payroll limit is $123 million, and quarterbacks average $3.8 million annually in salary.

There is no free agency in MLS. Its collective bargaining agreement with its players expires after the 2014 season.

MLS has what it calls the Designated Player Rule that allows each team to sign up to three players whose salary exceeds the cap. The rule is designed to allow teams to sign international stars.

For such players who are older than 23, teams are charged $368,750 against the salary cap, but the money is paid by the league rather than out of the team's budget. The team's owner picks up the remainder of the excess salary out of his own pocket. Younger players have a lower cap charge.

Steve Apostolopoulos said he is committed to signing a "big-name player from overseas." He declined to name names.